Commuters arrive on a Baby Bullet train at the Caltrain station in San Francisco, Calif., on Wednesday, Dec. 22, 2010. Caltrain will start operating the Baby Bullet express service on weekends beginning Jan. 1 for a trial period.

Regional transportation officials approved an agreement Wednesday to work with the High-Speed Rail Authority to electrify Caltrain, transforming the 149-year-old commuter line into a modern railroad capable of carrying more riders and accommodating high-speed trains.

The Metropolitan Transportation Commission approved the regional pact, which outlines a $1.5 billion plan to electrify Caltrain, install an advanced train-control system, and replace its fleet of rail cars using a combination of high-speed rail bond money and local, regional and state transportation funds.

The work could be done before 2019, said Caltrain Chief Executive Officer Michael Scanlon.

"This is a historic day," he said. "It provides the framework for high-speed rail to proceed in a reasonable, pragmatic and, I believe, enlightened way. And it will provide for the long-planned and long-needed improvements to modernize Caltrain."

The "blended system," suggested by a group of Peninsula legislators a year ago, is part of a new approach to building a high-speed rail link between San Francisco and Los Angeles. In addition to starting construction of the system in the Central Valley late this year or early next year, it calls for investing in commuter railroads in the Bay Area and Los Angeles so they can become part of the fast-train network.

The strategy is designed to combat criticism of the rail authority's earlier approach, viewed by many, particularly on the Peninsula, as heavy-handed and unresponsive. High-speed rail officials also hope it will temper criticism of the system's initial 130-mile stretch between Chowchilla and Bakersfield as "a train to nowhere," and concerns that the state's bond could produce nothing more than an isolated set of tracks.

An agreement to spend $1 billion in bond money for rail improvements - mainly rail crossings and new tracks - in Southern California was approved by the authority's board this month. The Bay Area agreement is scheduled for consideration on April 5, and is expected to be part of the revised business plan up for a vote at the same meeting.

Under the Bay Area agreement, the region would receive $706 million in high-speed rail bond money, and would cobble together a slightly larger amount in state, local and regional transportation funds to match the bond funds. The money would pay for electrification; an advanced signal system; and a fleet of lightweight, self-powered rail cars.

Caltrain officials say the improvements could eventually allow trains to travel up to 110 mph, but they would continue to operate at speeds up to 79 mph at first. However, electric-powered trains can start, accelerate and stop faster, allowing Caltrain to shorten travel time or add stops and pick up more passengers. Scanlon said electrification would cut the railroad's operating costs in half by eliminating the purchase of 4.5 million gallons of diesel fuel a year and replace it with far cheaper and greener electricity.

While the agreement supports the extension of Caltrain from its station at Fourth and King streets in San Francisco underground to the under-construction Transbay Terminal, elimination of 40 street-level railroad crossings on the Peninsula and construction of high-speed train depots in Millbrae and San Jose's Diridon Station, it does not include funding for those projects.

Failure to fund the downtown extension, a project whose estimates range from $1.5 billion to $4 billion, initially caused San Francisco officials, including Supervisor Scott Wiener, a commissioner, to balk at the deal.

Regional officials assured San Francisco the plan is still to get to the Transbay Terminal, which the state bond requires, and said the downtown extension will become a top candidate for federal funding.

"High-speed rail from Diridon station to the Transbay Terminal is going to happen," he said. "Period. End of story."